UBS (UBS) will absorb Credit Suisse (CS) in a $2 billion all stock deal brokered by the government to prevent the latter embattled bank from failing.
Financial Times reports that the two banks had little interaction, and that the Swiss government is working on changing rules that require a six-week shareholder comment period. Swiss authorities will also offer UBS a $100 billion credit line to sweeten the terms.
Despite a CHF 50 billion (about $54 billion) loan from the Swiss government, Credit Suisse could not restore investor confidence and stave off a steep decline in its share price.
The bank has been plagued by a series of missteps in the last year, and the banking crisis that was spurred by the failure of Silicon Valley Bank did not help the bank’s ailing stock price. Most recently, the firm found “material weakness” in its accounting procedures, delaying its annual report and sparking questions from the U.S. Securities and Exchange Commission.
About six months ago, the bank underwent a restructuring in an effort to shake off scandals and losses.